US officials arrested the founder of the bankrupt crypto lender Celsius, Alex Mashinsky. He has since taken a plea of not guilty to the fraud charges that were imposed by the US Department of Justice (DOJ).
Celsius founder pleads not guilty
Mashinsky was arrested by US officials on Thursday in New York. His arrest happened after the DOJ and other regulators accused the Celsius founder of luring customers to the lender by falsely representing its financial health. The regulators also claim that Mashinsky inflated the price of the native CEL token.
The US Magistrate Judge Ona Wang signed a court document for Mashinsky to be released after paying a $40 million bond. This bond will be secured by a financial claim on his New York home and a brokerage account that he holds with the First Republic Bank.
The bond was signed by his wide and another signee. The bond agreement has also come with conditions that Mashinsky needs to abide by to guarantee his freedom. Part of the conditions for the release says that Mashinsky needs to surrender the travel documents and not make any new applications for these documents.
During the period of his release, Mashinsky’s movements were restricted to the eastern and southern districts of New York. The Celsius founder will remain under pretrial supervision. If he intends to leave the aforementioned New York districts, he can only do so for a limited period and request authorization from the Assistant US Attorney and Pretrial Services Officer.
According to a report by CoinDesk, Mashinsky has vehemently denied the allegations made by the regulators. His lawyers have also said that Mashinsky will defend himself in court as the charges that have been filed against him are “baseless.”
Several US regulators bring charges against Mashinsky
The DOJ is not the only regulator seeking to bring charges against Mashinsky following the collapse of Celsius last year. The crypto entrepreneur is also facing other charges from the US Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Federal Trade Commission (FTC).
The SEC has said that Mashinsky and Celsius raised billions of dollars worth of investments using fraudulent and unregistered offers for crypto asset securities. On the other hand, the FTC has said that Celsius misappropriated more than $4 billion worth of customer deposits.
According to the CFTC, Celsius operated a massive unregistered commodity pool scheme that involved digital asset commodities. Before its collapse, Celsius was among the largest crypto lenders.
The Celsius platform witnessed significant growth during the 2021 crypto rally, with the gains seen at that time leading to the company becoming among the largest crypto lenders globally. The firm’s woes started last year during the crypto bear market, which led to the values of several digital asset businesses collapsing. The lender filed for bankruptcy in July 2022 because of volatile market conditions.